You Mean They Can Do That?

For this week’s Guest Post Friday here at Construction Law Musings, we welcome back Melissa Dewey Brumback.  Melissa is a construction law partner at Ragsdale Liggett, in Raleigh, North Carolina.  The bulk of her practice involves representing architects and engineers in construction-related claims, including construction administration and management, plan defects, testing failure claims and delay claims.   Melissa blogs at Construction Law in North Carolina, and can also be found on twitter @MelissaBrumback. 

Did you know that in some states (including North Carolina, where I practice), you can be sued over your construction project by someone you’ve never met?  And I’m not talking about somebody getting hurt.  I’m talking about somebody suing you because your company cost them delays, or profit, or money.  Yep, it’s true.  If you are negligent in the design or construction of a project, you can be sued by others that you may never have heard of, seen, or even imagined were involved in the construction project.

This recently came as a surprise to a client of mine who was headquartered in Virginia.  The firm was sued in North Carolina, and they were shocked that they could be sued by a subcontractor of the General Contractor, who they never met and were not in “privity” with.  While contractual privity is required in some states (hello, Virginia!), it is not in others, such as the Tar Heel state.

The same goes for statutes of limitations and statutes of repose.  You have a much longer liability in some states than others, depending on that state’s particular laws.  And, these laws change.  Frequently, in some cases.

What is a contracting company, or engineering firm, to do?  Simple, really.  Don’t be a cheapskate.  When working in a state that you are not familiar with, spend a few bucks to talk with a lawyer licensed in that jurisdiction about issues particular to that state.  Don’t just assume that all states are alike in the legal realm.  In the same way that Building Codes and licensing requirements differ from jurisdiction to jurisdiction, so too do the laws.  Far too many companies are flying blind when it comes to out of state work.  Don’t be one of them.

If you violate my first recommendation (and I know many of you will), at least consider hiring a local lawyer at the first hint that there might be a lawsuit in your future.  If you have certain types of insurance policies, you might even get your carrier to pay for that lawyer under what’s called “loss prevention”.  Yes, you heard that right: you might even get some free legal help to weather the storm of threatened litigation.  But if your insurance doesn’t provide this nice little perk?  Again, don’t be a cheapskate.  Hire someone on your own dime to talk about what the state laws provide.  Don’t just rely on Mr. Google.  Sure, Google is great and all, but he has yet to be licensed to practice law in all 50 states.

Consider yourself forewarned.  As someone once said, don’t be “penny wise and pound foolish”.

As always, Melissa and I welcome your comments below.  Please subscribe to keep up with this and other Guest Post Fridays at Construction Law Musings.